Openwave Systems' CEO Discusses F2Q2012 Results - Earnings Call Transcript

Openwave Systems Inc. ( OPWV)

F2Q2012 Earnings Conference Call

February 1, 2012 5:00 PM ET

Executives

Mike Bishop – Investor Relations

Mike Mulica – Chief Executive Officer

Anne Brennan – Chief Financial Officer

Analysts

Scott Sutherland – Wedbush Securities

Charlie Anderson – Dougherty and Company

Chris Cohen – Stifel Nicolaus

Scott Zeller – Needham & Company

Presentation

Operator

Good day, ladies and gentlemen, thank you for standing by. Welcome to Openwave’s Earnings Second Quarter 2012 Conference Call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. (Operator Instructions) This conference is being recorded today, Wednesday, February, 1, 2012.

I would now like to turn the conference over to Mr. Mike Bishop of Investor Relations. Please go ahead.

Mike Bishop

Thank you, good afternoon thank you for joining us today to discuss the results of Openwave Systems’ second quarter of fiscal year 2012. Joining me today from Redwood City are Mike Mulica, Chief Executive Officer and Anne Brennan, Chief Financial Officer.

Before we discuss the results of the quarter, I want to remind everybody that we are operating under the rules of Regulation FD. The second quarter financial results’ press release was distributed at the close of market today, which includes a non-GAAP to GAAP reconciliation. And if you’ve not yet seen a copy, you can find one at our website at openwave.com. For your convenience, this call is being recorded and will be available for playback from our website for three months.

Further, any remarks that maybe made on this call or in our earnings press release about future expectations, plans or prospects for the company may constitute forward-looking statements for the purpose of the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995.

The actual results may differ materially from those indicated by the forward-looking statements as a result of various important factors. These factors include the specific risk factors discussed in the company’s press release that was distributed today, and in the company’s filings with the SEC, including, but not limited to, the fiscal 2011 year-end results on Form 10-K, and any other reports subsequently filed with the SEC.

We intend to make forward-looking statements based on management’s outlook as of today. We do not intend to update these statements until the release of Openwave’s next quarterly report and disclaim any obligation to do so prior to that time. We reserve the right to update the outlook for any reason during the quarter.

I would like to note that during the discussion of the financial results, unless otherwise indicated, gross margin expense and earnings-related items are recorded on a non-GAAP basis, which excludes stock-based compensation, certain realized losses and impairments on investments, amortization of intangibles, restructuring expense, discontinued operations and any amounts related to unusual events.

Please access our financial metrics summary that is available on the Investors Relation section of openwave.com to review Openwave’s historical financial performance and reconciliation of the non-GAAP measures we report to the corresponding GAAP measures.

And with that, I’d like to turn the call to Mike.

Mike Mulica

Thanks Mike and good afternoon, everyone. Thanks for joining with us to discuss the second quarter results. First, I will give you a quick overview of the revenue from the quarter. The revenue for the first quarter was $36 million and we recorded bookings of $20.4 million. This was comprised entirely of the product bookings. There is a significant improvement from last quarter, $8.7 million in product bookings, non-GAAP EPS with a net loss of $0.06.

On last quarter’s call, we highlighted three important priorities for the quarter. First was our focus on our IP initiative. Secondly, we needed to conduct an analysis of our product business to determine the strategy to move forward. Third, was to focus on cash conservations despite the low level of bookings last quarter.

As you are probably aware with low bookings comes increase cash burn. I'm happy to report we arrived at quarter-end with satisfactory results on all fronts. During the last quarter, we executed a thorough analysis of our business in order to determine a course of action that would maximize the return to our shareholders.

The company has made significant investments in mediation, messaging and location products and we believe they can beat the significant growth drivers over the years. However, we made the difficult decision that those products and our employers in those product groups will be most successful being part of a larger organization. Our strategy frees up resources to focus on intellectual property initiatives.

One outcome of this analysis was the decision to divide the company into three business units. Mediation, Messaging, and Intellectual Property. This was designed to best evaluate each of these three pieces and to unencumber each unit for potential sale. As you have seen from our announcement on January 12, we made a strategic decision to pursue the divestiture of our product business units, retaining to our present company as our financial advisor.

We remain completely committed to our current customers, which is why we feel that acquired debt and acquiring entity will be better positioned to make strategic investments in our products, so they remain market leading and innovative. We are in the preliminary phase of exploring potential buyers for the products and we obviously won’t comment on the process. When and if there is something to announce, we will announce it.

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